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Utah City Could Challenge AT & T With an Overbuild

Provo, Utah, last week took the first step toward building a $40 million telecommunications network to challenge AT & T Broadband for cable customers.

Over the MSO's objections, the Provo City Council is exploring a possible $2.3-million acquisition of Provo Cable, a small operator set to go out of business at year's end.

The proposed acquisition would deliver Provo Cable's 2,600 customers to the city at a bargain rate of $884 per subscriber. It would also include the company's existing infrastructure.

"The city council is interested in keeping competition alive in the city," Provo telecom manager Paul Venturella said.

Local officials are aware that surrounding communities without even the little competition provided by Provo Cable are paying higher cable rates, Venturella said. But they're also aware that 10,000 customers would be needed for such a network to succeed.

The council is expected to vote on whether to allocate the funds to acquire the system on Oct. 17.

In the meantime, AT & T has launched a local media blitz, claiming that a city-owned telecom network will cost $1,200 over five years for each of Provo's 32,000 households.

The MSO is pressing its case via a coalition called Utah Citizens Against Higher Taxes and Bigger Government, which claims that the city's tax-exempt status would give it an unfair advantage over AT & T.

Venturella said AT & T was "trying to protect its self-interest" with "emotional propaganda.

"Provo is the second largest community in the state. I'm sure that AT & T doesn't want us setting a precedent," he said.

Elsewhere, Fairview, Ore., a suburb of Portland, recently became the latest member of the Mt. Hood Cable Regulatory Commission to authorize a franchise for Western Integrated Networks.

Western Integrated spokesman Bill Mahon said Fairview will be part of the company's Portland network, which it expects to start building within six months.

The MHCRC communities of Portland, Gresham and Fairview have already signed deals with WIN, and Troutdale and Wood Village are expected to do so in the coming weeks. The five MHCRC communities represent about 300,000 households currently served by AT & T.

Utility-linked telecommunications firms also made competitive moves last week, including Seren Innovations Inc., the Braintree, Mass., Electric Light Department and Grande Communications, which received an investment from a Houston power company.

Seren will add to its East San Francisco Bay cluster through the acquisition of tiny Ponderosa Cable Systems, a 500-subscriber provider in Danville, Calif. Terms of the deal were not disclosed.

Seren has upped the competitive video ante as well. In its St. Cloud, Minn., and California systems, the provider will utilize DemandVideo's video-on-demand technology with VCR functionality.

The service, branded AstoundNOW, will deliver current movie releases for $3.95, older titles for $1.95 and children's films and how-to videos for 95 cents. Adult material is priced at $7.95. For those prices, consumers buy unlimited viewing for 48 hours.

In Massachusetts, the Braintree town selectmen have given the local electric utility the final nod to move into the video business. Braintree Electric Light Department will deliver video over the same hybrid fiber-coaxial network that serves as the backbone for its Internet service. It serves 14,000 customers.

The utility will be able to build out its backbone in 12 months, according to its chief executive. Capital comes from a $3.5 million bond offering also approved by the selectmen.

Meanwhile, Reliant Energy of Houston announced it will invest $25 million in Texas-based Grande Communications, and may invest a similar amount in future Grande equity financing, the companies said.

Construction of Grande's deep-fiber network has started in Austin and San Antonio, with the goal of building a cluster along Texas' Interstate 35 highway.

Houston also granted Grande a 15-year franchise. Construction there should begin in the fourth quarter.